Huge NZ harvest will ‘add to country’s woes’

New Zealand wine producers have been warned a potential 300,000 tonne harvest in 2011 could have serious consequences for the industry.

The latest industry survey published by accountancy firm Deloitte and New Zealand Winegrowers reports a reduced vintage in 2010, totalling 265 tonnes, has gone some way to alleviating problems caused by the previous two record crops but Deloitte partner, Paul Munro warned, ‘Predictions that the 2011 harvest could exceed 300,000 tonnes threaten to add to the industry’s woes’.

‘Future supply must be matched to global demand, otherwise a cheapening of our wines in key international markets could occur,’ he added.

The country’s marketing body, New Zealand Winegrowers, is urging its producers to cap yields to prevent a bumper crop. Philip Gregan, CEO of Winegrowers told Decanter.com: ‘We sent out a letter to every grape grower and wine producers last week stressing the importance of being market-led and have had meetings in Hawke’s Bay and Marlborough to get home the same message: there’s a fine line between having a supply balance and imbalance.’

The report also revealed the past year has continued the recent trend of declining profitability and rising indebtedness, with little prospect of any improvement in the short term.

The smallest wineries are suffering the most, losing around NZ$50 per case. The country’s biggest producers are making a small profit but hold more than 10 million litres of stock and it warned releasing this stock would fuel the downward pressure on prices, making life even more difficult for the smaller players.